BREAKING NEWS: Massive Stamp Duty cuts in Victoria for first home buyers

Why? Because lower taxes are a good thing. And because people should not be taxed simply for buying and selling an asset.

 

Hmm the more I think about the implications of these changes the more it kind of excites me.

Right on the mark. I think some apartment developers will need to reconsider the expected end values for these projects.

Post 1 July 2017 they are going to be wedged hard between the $750k cap on FHOG and the removal of OTP incentives for investors.

 

Would This put the brakes on the market for a few months, until the July kick off date ?

 

Who knows. It could go crazy in the lead up to 1 July 2017 and leave no places under $600k left lol.

Interesting times ahead..

 

They're screwed. Few cases in point.

My mate built a site in Hawthornin Melbourne with numerous apartments. His IRR was already razor thin (sub 15%). He's now had some potential defaults making his IRR sub 10%.

My neighbour in inner city Melb applied to build a 5 storey hotel 2 years ago. Forget about even prices. So many neighbouring owners have objected, it got knocked back. Now two years in he still hasn't started construction, has a VCAT hearing mid year which he'll probably still not get his permit from. Even if he gets it up his IRR would be dismal after all this time and legals.

Another mate building a hotel in city, not sure what's happened. He's in court too. IRR going to get smashed also.

And that's assuming a stable currency. If the US raises rates, the AUD falls, all their investors will be under water.

 

It should fly. The Govt just made housing less affordable.

 

General concensus from the replys seems that prices will artificially increase, and would be surprised if so. However say the FHO's buy their place in the outer suburbs, and for argument sake, say the property increases 40-70k right under the 600k threshold, there is going to be an increasing risk of bank vals coming in under. Especially in the short term. Thoughts on this?

 

Very basic stuff. The reduction of stamp duty for FHB's to zero, and the 20k regional allowance will certainly create a flurry of activity in the FHB markets. While the Vic gov means well, and on face value it's seen to be doing the right thing in regards to housing affordability. All these initiatives, combined with increased demand, will only push the prices further up.

I'm interested to see what assistance they give FHB's for Melb metro areas.

 

Odd that the income limits for singles is 75k and couples only 20k more at 90k...

 

1% per what? I presume per year.

In typical incompetence, or fluff govts don't provide detail.

 

Not likely to brake.

I guess a bunch of seasonal investors will now jump in and start snapping $400-550k stocks in the next few months which drive the price further up. FHB will sit on the sideline for the next few months and wait till July before they jump back in, by that time price might already gone up by 5-10%. Will be an interesting time to see what's going to happen on Northern and western FHB suburbs

 

It's definitely occurred when previous first home buyer initiatives have been announced. There's often been a boom or slump (depending on the announcement) for about 60 days prior to July, then a reversal afterwards.

The outer suburbs of Melbourne will go nuts, until they hit $600k, then stagnate for years. Geelong, Ballarat and some of Bendigo will be beneficiaries of this, at least until prices there hit $600k.

Buy cheaper stock now, sell in a few years when prices start to stagnate.

 

Just what I was thinking Peter, will sell when they double in value. So glad I didn't choose to sell off Just yet.
This has to be the second easiest growth method I could have asked for, first was council rezoning by fluke in inner Melb houses, now this.

I shouldn't be shocked by Daniel Andrews government after the east/west link huge stuff up, but that guy completely shocks me everytime. Wonder what's next?

 

Holy h*ll... just when I thought Melbourne might slow down this year and give me another chance to save another deposit... or x3

This will only create another boom in Melbourne, watch the outer suburbs in the SE, North and West explode and attract even more FHBs from Sydney and Brisbane.

Plus, developers will probably slap another 10-20k on prices just before July. I'm just so disappointed I didn't get a chance to buy a couple more before this announcement - grrr...

 

to clarify - does this apply to all FHB's? i.e. those who are purchasing for PPOR purposes AND investment purposes?

 

answered my own question

"The stamp duty exemption will apply to new and existing homes (including houses, townhouses, apartments and off-the-plan dwellings) that cost under $600,000 and are lived in for at least 12 months (i.e. Investment properties are not eligible)."

 

First home owners only make up a small portion of the market though? Is this change that likely to keep the boom going in Melbourne for 2017?

 

Outer suburbs are moving anyhow as it's still affordable for many. Any additional competition will help push it along.

Unless interest rates go up to Levels that people can't afford.

 

You can use NSW First Home Owners Boost on 2008 as a reference.
Very similar situation, except NSW gave FHB an extra $7000 grant back in those days

 

Yep, let's hope for some developers to fall!

Who cares about the people who work there, or about their families and mortgages....